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More real estate brokers go out on their own

Published: Saturday, June 7, 2014 at 12:30 a.m.

Last Modified: Friday, June 6, 2014 at 10:31 p.m.

When the real estate market crashed here in the middle of the past decade, some brokerages either didn't survive or were forced to merge into bigger ones.

Now the picture has changed, local brokers say, as more of them strike out on their own, spreading their entrepreneurial wings with the hope of garnering more money than they would working for larger agencies.

Most of the brokers who are leaving the big brands behind contend that the homebuyer or seller values the agent more than the company name.

Plus, the way real estate business is conducted now – online or via email and text – levels the playing field.

A virtual office may be all a broker needs.

13 new firms

"Thirteen new firms have formed over the past year," said Jody Wainio, president of the Wilmington Regional Association of Realtors. Two of them had two agents and the rest were single, one-person firms, said Wainio, who herself is owner of the one-person Buyer's Choice Realty.

"It's all about the money," Wainio said.

"Some folks work with the larger firms and build up a clientele and then they realize that people do business with people, not firms," she said. "And they have decided to go out on their own to be able to keep more of their profits and not pay a franchise fee.

"Considering that the market is changing in a positive direction it gives people the security to think they can make it out on their own."

Real estate brokers and agents most often work for firms as independent contractors. They get to use the company's offices and other resources, and in turn the firm gets part of the sales commission. Most franchises charge agents fees and the individual agency's cut of commissions varies.

Virtual offices

But Wainio pointed out that "with more virtual offices it relieves the need for office help and a person that sits at a front desk. (The agents) do most of their business online or by phone."

"All across the country you're seeing it splinter down and spread out into little boutique shops," said Buddy Blake, owner of Re/Max Essential, who himself broke off from Coldwell Banker Sea Coast four years ago to form his own firm. "It used to be that the companies generated all the leads and handed them off to the agents for a big split (of the commission). Now agents generate their own leads, or if a company generates leads they charge more fees."

Sandy Beals and husband Dick own Wilmington Real Estate 4 U.

"When we first came here we worked with a couple of big firms. It came down to them taking a lot of money out of our pocket that we had earned – a lot of fees," Sandy Beals said.

"After doing that about three years, we bought a (Realty Executives) franchise where the agents that work for you earn 100 percent of the commission, but they paid an office fee per month.

"When the market changed we dropped the franchise and now manage a small firm with three agents."

"I see more and more people going out on their own," she said. "More and more I've seen people doing their own sole proprietorships, LLCs or S corporations."

The good times

The head of a major firm here saw the same trend.

"As the market increases there are more people who want to go out and start their own businesses," said Tim Milam, president of Coldwell Banker Sea Coast Advantage Realty.

"You find people who want to open up their own businesses when times are good. When the market is improving you see less consolidation.

"I don't fault someone to do that. When people see the market improving, they say, ‘I don't need the support of another company,' " Milam continued.

"But when the market contracts I start getting phone calls from people who say, ‘Have you ever thought about buying another company?'?"

Some real estate players here still see agents and brokers gravitating toward their firms because they value the brand and the backup a large firm can bring.

Value in the brand

Jim Wallace, president of Intracoastal Realty, sees value in an agency's brand, but still distinguishes his from the national operators.

"I compare it to the craft beer industry," said Wallace, whose agency is independent and not affiliated with any of the big franchise operations.

"The major brands are the Millers and Buds who are struggling to keep their market share. People are trending to doing things more locally. People like to go local and that trend all around the country helps a company with a local brand."

Jeff Sweyer, president of Century 21 Sweyer & Associates, sees a trend of smaller companies that "over the last year or two are finding opportunities to move into bigger companies" that give better services to their sales associates.

The recent merger of Century 21 Brock & Associates into Sweyer was for different reasons, however, he said.

Owners Danny and Faye Brock "started to move into a different part of their careers and were looking for a succession plan for their company," Sweyer said. "They wanted to align with a company with similar values."

They brought with them their particular strengths in foreclosures and commercial real estate, he added.

But the urge to strike out on one's own may be part of a broker's DNA.

"Realtors don't like the corporate environment," Blake said. "One of the reasons you become a Realtor is so you won't be micromanaged."

<p>When the real estate market crashed here in the middle of the past decade, some brokerages either didn't survive or were forced to merge into bigger ones.</p><p>Now the picture has changed, local brokers say, as more of them strike out on their own, spreading their entrepreneurial wings with the hope of garnering more money than they would working for larger agencies.</p><p>Most of the brokers who are leaving the big brands behind contend that the homebuyer or seller values the agent more than the company name.</p><p>Plus, the way real estate business is conducted now – online or via email and text – levels the playing field.</p><p>A virtual office may be all a broker needs.</p><p>13 new firms</p><p>"Thirteen new firms have formed over the past year," said Jody Wainio, president of the <a href="http://www.starnewsonline.com/section/topic9987"><b>Wilmington Regional Association of Realtors</b></a>. Two of them had two agents and the rest were single, one-person firms, said Wainio, who herself is owner of the one-person Buyer's Choice Realty. </p><p>"It's all about the money," Wainio said.</p><p>"Some folks work with the larger firms and build up a clientele and then they realize that people do business with people, not firms," she said. "And they have decided to go out on their own to be able to keep more of their profits and not pay a franchise fee.</p><p>"Considering that the market is changing in a positive direction it gives people the security to think they can make it out on their own."</p><p>Real estate brokers and agents most often work for firms as independent contractors. They get to use the company's offices and other resources, and in turn the firm gets part of the sales commission. Most franchises charge agents fees and the individual agency's cut of commissions varies.</p><p>Virtual offices</p><p>But Wainio pointed out that "with more virtual offices it relieves the need for office help and a person that sits at a front desk. (The agents) do most of their business online or by phone."</p><p>"All across the country you're seeing it splinter down and spread out into little boutique shops," said Buddy Blake, owner of Re/Max Essential, who himself broke off from Coldwell Banker Sea Coast four years ago to form his own firm. "It used to be that the companies generated all the leads and handed them off to the agents for a big split (of the commission). Now agents generate their own leads, or if a company generates leads they charge more fees."</p><p>Sandy Beals and husband Dick own Wilmington Real Estate 4 U.</p><p>"When we first came here we worked with a couple of big firms. It came down to them taking a lot of money out of our pocket that we had earned – a lot of fees," Sandy Beals said. </p><p>"After doing that about three years, we bought a (Realty Executives) franchise where the agents that work for you earn 100 percent of the commission, but they paid an office fee per month.</p><p>"When the market changed we dropped the franchise and now manage a small firm with three agents."</p><p>"I see more and more people going out on their own," she said. "More and more I've seen people doing their own sole proprietorships, LLCs or S corporations."</p><p>The good times</p><p>The head of a major firm here saw the same trend.</p><p>"As the market increases there are more people who want to go out and start their own businesses," said Tim Milam, president of Coldwell Banker Sea Coast Advantage Realty. </p><p>"You find people who want to open up their own businesses when times are good. When the market is improving you see less consolidation.</p><p>"I don't fault someone to do that. When people see the market improving, they say, 'I don't need the support of another company,' " Milam continued. </p><p>"But when the market contracts I start getting phone calls from people who say, 'Have you ever thought about buying another company?'?"</p><p>Some real estate players here still see agents and brokers gravitating toward their firms because they value the brand and the backup a large firm can bring.</p><p>Value in the brand</p><p>Jim Wallace, president of Intracoastal Realty, sees value in an agency's brand, but still distinguishes his from the national operators.</p><p>"I compare it to the craft beer industry," said Wallace, whose agency is independent and not affiliated with any of the big franchise operations.</p><p>"The major brands are the Millers and Buds who are struggling to keep their market share. People are trending to doing things more locally. People like to go local and that trend all around the country helps a company with a local brand."</p><p>Jeff Sweyer, president of Century 21 Sweyer & Associates, sees a trend of smaller companies that "over the last year or two are finding opportunities to move into bigger companies" that give better services to their sales associates.</p><p>The recent merger of Century 21 Brock & Associates into Sweyer was for different reasons, however, he said.</p><p>Owners Danny and Faye Brock "started to move into a different part of their careers and were looking for a succession plan for their company," Sweyer said. "They wanted to align with a company with similar values."</p><p>They brought with them their particular strengths in foreclosures and commercial real estate, he added.</p><p>But the urge to strike out on one's own may be part of a broker's DNA.</p><p>"Realtors don't like the corporate environment," Blake said. "One of the reasons you become a Realtor is so you won't be micromanaged."</p><p><i></p><p><a href="http://www.starnewsonline.com/section/topic99"><b>Wayne Faulkner</b></a>: 343-2329</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @bizniznews</i></p>